Tag Archives: message

It’s High Time for the Cannabis Industry to Pay Attention to Contact Compliance

By Daniel Blynn
No Comments

Communicating with consumers through the telephone—either by text messages or by calls—is a great way to engage with them. Indeed, a recent analysis of text messaging trends reveals that most consumers check their cell phones more than 20 times a day, with almost 20% saying they check it more than 50 times.1 Text messages have a nearly five-times higher open rate than email, and the average consumer has 96 unread emails in his inbox compared to about one unread text message at any given time.2 In short, used properly, text messaging is an effective medium to reach consumers. And cannabis companies have embraced texting with open arms, especially given that other forms of advertising currently are off limits to the industry.

But with the utility of text messaging consumers comes substantial risk. Cannabis companies are frequent targets of private litigation arising out of their texting practices. Over the past two years, dozens of class action lawsuits alleging unlawful text messages have been filed against cannabis companies, including well-known multistate operators and less recognizable ones. Most of these cases are ongoing and may rightfully be considered “bet the company” litigations. For example, a pending case against cannabis delivery company Eaze Solutions, Inc. alleges that unsolicited text messages were sent to 52,104 individuals.3 Assuming each putative class member received just one text from Eaze, the statutory damages exposure ranges between $26 million and $78 million. The court twice has rejected proposed class settlements of $1.75 million and, later, $3.5 million as being too low. Given the potential exposure, before cannabis companies click the send button on a text message, they need to ensure that they’re abiding by the law.

At the federal level, the Telephone Consumer Protection Act (TCPA) regulates all types of text messages, telemarketing and transactional/informational alike. Generally speaking, the TCPA governs how text messages are sent (i.e., manually versus automatically dialed), and how calls are conducted and voicemail messages delivered (live representative versus “artificial or prerecorded voice”).4 The TCPA also contains do not call rules applicable to marketing messages. The TCPA is enforced by the Federal Communications Commission (FCC) and, notably, through private lawsuits, including class actions. Under the TCPA, a private plaintiff can seek statutory damages of $500 for each unsolicited autodialed text message (or unsolicited call that utilizes an artificial or prerecorded voice or delivers a prerecorded message). If a solicitation text is sent to a telephone number registered on the National Do Not Call Registry or the cannabis seller’s own internal do not call list, the statutory damages are “up to” $500 per call or text. In all cases, statutory damages may be trebled to $1,500 if the TCPA violation was committed either knowingly or willfully.

These rules fit atop myriad state telemarketing and do-not-call laws, which may be more restrictive than the TCPA.

While I could fill up this entire website with the various calling and texting issues with which sellers generally struggle under the TCPA—such as the use of artificial or prerecorded voices and prerecorded messages, how to handle reassigned numbers, revocation of consent issues, etc.—this article focuses on the basic rules governing how cannabis companies can text consumers, and what types of consent they need to do so under the Act.

Overview of TCPA’s Consent Rules

Under the TCPA, a seller is required to have a consumer’s “prior express consent” in order to send an autodialed non-marketing text message to a cell phone; The consent rule for autodialed marketing text messages to cell phones are different in that they require “prior express written consent” (EWC). No consent is needed in order to manually send a text message (and note that “manually” does not necessarily mean that an individual must dial all ten digits and click send from a standard smartphone).

“Prior express consent” is a lower level form of consent and generally exists where a consumer voluntarily has provided her telephone number to the seller.

“Prior express written consent,” on the other hand, is a heightened consent standard requiring a written agreement bearing (1) the signature of the person called (either traditional “wet” signature or an electronic/digital one) that clearly authorizes the seller to deliver or cause to be delivered to the consumer telemarketing messages; and (2) the telephone number to which the signatory authorizes such telemarketing messages to be delivered. If the seller utilizes an autodialer to send a marketing text message to a cell phone, then the written agreement with the consumer must also clearly and conspicuously disclose both that (a) the text may be sent using an autodialer, and (b) the consumer is not required to provide his consent as a condition of purchasing any goods or services. This EWC to be contacted must have been provided by the consumer before the text is sent. Unlike the lower standard for prior express consent, the mere provision of a cell phone number to the seller does not constitute the required EWC to be contacted at that number via an autodialer marketing purposes.

Confusing enough? Don’t worry, a table summarizing the current TCPA consent rules is below:

What Type of Text Are You Sending?

Generally, the type of consumer consent that is needed to send a text message is a function of the type of text and how it is being sent. “Telephone solicitations” are subject to more restrictions than purely informational or transactional text messages. The TCPA defines “telephone solicitation” to be “the initiation of a [text] message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services.”

On the other end of the spectrum lie pure informational or transactional text messages. These are communications designed to provide information, rather than promote products and services (in the case of informational calls), and to “facilitate, complete, or confirm a commercial transaction that the recipient has previously agreed to enter into” (in the case of transactional calls). For example, customer satisfaction survey texts and texts to confirm orders and deliveries are informational and transactional, respectively.

Finally, the TCPA also covers a third category of text messages—“dual purpose” texts. These are texts with either a customer service or informational component as well as a marketing one. Because courts and the FCC take an expansive view of what constitutes telemarketing, dual purpose texts are treated as pure marketing messages and subject to the more rigorous standards to obtain the requisite level of consumer consent.

Common examples of texts that cannabis companies send and the corresponding level of consent needed are as follows: 

  • Autodialed Text Messages: Under the TCPA, an autodialer is defined to be equipment, which has the capacity to store or produce telephone numbers to be called using a random or sequential number generator, and to dial such numbers without a requisite level of human involvement. However, there currently is a “significant fog of uncertainty” as to what is and is not an autodialer, with different courts reaching conflicting decisions as to, for example, whether simply dialing from a curated list of targeted telephone numbers constitutes autodialing, or whether the numbers on that list must have been randomly or sequentially generated in order for a platform to constitute an autodialer.
  • While proceedings are ongoing at the FCC to clarify the autodialer definition, the Supreme Court recently agreed to decide the autodialer issue during its next term in a TCPA case filed against Facebook; a decision is expected by May or June 2021. Notably, in mid-September 2020, the Department of Justice filed a “friend of the court” brief taking the industry-favorable position that a platform itself must randomly or sequentially generate the telephone numbers that it texts to be considered an autodialer under the statute.
  • Texts sent by autodialer (whether the autodialing functionality is actually used to send the text or not) require consent from the recipient. Note that this rule generally applies to both individual and business cell phone numbers. As long as the text is not a solicitation message, then consent may be obtained orally. Alternatively, if a consumer provides his cellular telephone number to you via an online lead form or during the checkout process, then this should be sufficient to constitute “prior express consent” to receive autodialed non-solicitation texts, such as order confirmations or delivery updates. The key to obtaining prior express consent, however, is that the consumer provide you with his telephone number voluntarily.
  • However, EWC is required to send a text for marketing purposes using an autodialer. The EWC requirements are described above and examples of EWC are below.
  • Note that, under the TCPA, the seller has the burden of demonstrating that it had the requisite level of consent to send the text in question. Thus, cannabis companies should maintain records evidencing such consent. A good rule of thumb is to maintain such records for a period of five years from the date of text, which covers the TCPA’s statute of limitations and the limitations periods under most state telemarketing laws.
  • Manually-Dialed Text Messages: If a cannabis company manually sends text messages—e., using a device that does not have the capacity to autodial—then no special consent is needed. However, even for manually-dialed texts, applicable do not call lists must be checked.
  • Texts to Numbers on Do Not Call Lists: The TCPA also prohibits companies from sending marketing texts to consumers whose telephone numbers are registered on either the National Do Not Call Registry or the seller’s own internal do not call list, unless an exemption applies, such as calls with the consumer’s EWC or to consumers with whom the seller has an “established business relationship.”5 The TCPA’s do not call rules are agnostic to how a telephone number is dialed, whether it be manually or by automated means. Be sure to scrub against relevant do not call lists.

Best Practices for Obtaining Proper Consent

As noted above, for autodialed non-marketing text messages to cell phones, the lower level of simple “prior express consent” is required. Prior express consent is deemed to exist by virtue of a consumer having provided his telephone number to a cannabis company, either orally or in writing.

EWC for autodialed solicitation text messages, however, requires more. First, specific disclosures must be made “clearly and conspicuously” to the consumer. Specifically, a consumer should be advised and agree that, by providing his telephone number to the cannabis company, he is agreeing (1) to receive potentially autodialed (2) marketing text messages, and (3) that he is not required to provide his consent as a condition of making a purchase. This disclosure should not be placed beneath a submission button on a lead form or checkout page (unless an unchecked check box is utilized to demonstrate that the consumer has reviewed and accepted the disclosure); it needs to be unavoidable. The disclosure should be presented in readable, crisp font, both in size and in color, that contrasts against its background. For example, the following disclosures likely would pass muster to demonstrate EWC:

As you may now appreciate, the TCPA is a minefield (and this article just scratches the surface). However, with planning and a good compliance program, the law can be navigated to minimize risk while, at the same time, allowing for communications with cannabis consumers. Remember, an ounce of compliance now can lead to a pound of litigation prevention later.


Disclaimer: Using, distributing, possessing, and/or selling marijuana is illegal under existing federal law. Compliance with state law does not guarantee or constitute compliance with federal law. This informational overview is not intended to provide any legal advice or any guidance or assistance in violating federal law.


References

  1. Zipwhip, 2020 State of Texting, at 4 (2020).
  2. Id. at 11.
  3. See Lloyd v. Eaze Solutions, Inc., No. 3:18-cv-05176 (N.D. Cal.).
  4. Although the TCPA utilizes the term “calls,” courts have found the statute applies with the same force to text messages. This article focuses on text messaging but most of the principles extend to calls as well.
  5. There are two types of “established business relationships” (EBRs) under the TCPA: (1) inquiry EBRs and (2) transactional EBRs. Pursuant to a transactional EBR, a seller may text a consumer whose telephone number is listed on the National Do Not Call Registry for up to 18 months after the consumer’s last purchase, delivery, or payment—i.e., from the date of the seller’s last transaction with the former customer—unless the consumer asks the seller to stop calling him. In that case, the seller must honor the do not call request by placing the consumer’s telephone number on its own internal do not call list. Under an inquiry EBR, the seller may text a consumer who has inquired about its products or services, but only for up to three months. Again, if the consumer asks the seller to stop calling within that three-month timeframe, it must honor the request and add the consumer’s telephone number to its internal do not call list. Telephone numbers on the seller’s internal do not call list should remain on that list indefinitely or until the consumer subsequently provides her prior express written consent (or explicitly asks to be removed from the internal do not call list); a new EBR will not override an internal do not call request. Indeed, as to the latter, the Federal Trade Commission and several state attorneys general made this point clear in their briefing in a recent TCPA and Telemarketing Sales Rule litigation then-pending in Illinois federal court; the practical reason for the rule is that a consumer may wish to do business with a seller yet not receive telemarketing calls.

Practical Advice on How to Avoid a TCPA Suit

By Paul Gipson
1 Comment

Texting consumers is a very effective means to drive engagement and ultimately sales. Text messages have outpaced emails when looking at conversion and click-thru rates. In fact, 95% of texts are read in ninety seconds or less! While text messages can be a great way to engage with prospects and customers, the FCC’s Telephone Consumer Protection Act (TCPA) is a regulation you need to be mindful of. In fact, the average cost of a TCPA settlement is over $6m dollars, which doesn’t include legal fees or reputational damage.

Over the past few years, there have been about 4,000 TCPA cases filed annually. Take a look at the growth:

Companies are being targeted for various reasons, but there are a few that I’ll cover below along with some advice on how to avoid TCPA suits.

See if you can spot the trend in these cases:

  • Papa Johns: $16.5m settlement due to texting pizza specials to consumers without their consent.
  • Abercrombie & Fitch: $10m settlement due to texting store promotions to consumers without their consent.
  • Rack Room Shoes: $26m settlement for texting their reward program members with various sales without their consent.

Do any of these campaigns sound like something your company is engaged in?

So, you’ve got someone who has signed up for a rewards program, wants to receive deals, or has provided their number to your company for other purposes, but you are concerned about the TCPA (hopefully). Based on my experience working with hundreds of clients at CompliancePoint, here’s where I think you should start. But first…

Quick assumption: Your company is using an automated system to send both informational and promotional texts. Examples include “blast campaigns” (upcoming sale) or “triggered campaigns” (signed up for rewards).

Quick point: Just because the text message says your store is having a sale but doesn’t ask the consumer to buy anything on the message, you may think it’s not considered “telemarketing”. This is wrong. Any plan to sell now or in the future through direct marketing is telemarketing and subject to the TCPA.

Here are my top 5 things to consider:

  1. Obtain consent. This is not achieved by simply having a number provided by the consumer. Instead, the consumer must affirmatively agree to receive promotional calls/texts by automated means. This is done through a clear disclosure and often accompanied by an unchecked checkbox.
  2. Honor opt-outs. This seems obvious right? Provide instructions on how to opt-out and look for other phrases like “stop/quit/cancel”. Opt-outs should occur immediately with most common texting platforms.
  3. Keep records. If you receive a complaint, you want to be able to respond confidently and records help you do that. The key records to maintain are your texting records (the phone numbers you texted, the date/time of the text, and the content of the text), your consent opt-in forms, and opt-out requests from consumers with dates. Ask yourself: what records do you need to prove you had consent, and what records prove you didn’t text a consumer after they opted out.
  4. Only text consumers between the hours of 8AM and 9PM according to their time zone. I always recommend going off address and not phone number due to cellphone mobility. If you text a California number at 8PM, but the phone owner lives in New York, you might get a few complaints.
  5. Monitor compliance with these items. Another one that seems obvious, yet most companies fail to do so, and you see above what happens. I guarantee you’ll find issues with most audits.

Bonus – here is a more comprehensive checklist on how to achieve a Safe-Harbor defense.

This article is not intended to be a scare tactic. The TCPA legal landscape is rampant and consumers are more aware now than ever of their rights. A quick Google search of “Cannabis TCPA” helps to illustrate the fact that this industry, like most, is not immune. However, with proper compliance parameters in place, your company can enjoy the benefits of texting with consumers with peace of mind.

Jennifer Whetzel

Branding for Cannabis Companies 101: Part 3

By Jennifer Whetzel
No Comments
Jennifer Whetzel

Editor’s Note: In Part 1, Jennifer Whetzel introduced the concepts of branding, marketing and advertising for cannabis companies. Part 2 took a closer look at the benefits of branding. Part 3, published below, illustrates the different archetypes to use in branding.


People talk a lot about consistency when it comes to branding; after all, it’s a feature of the world’s most lucrative consumer brands (just ask Apple, Nike and Starbucks). As a result, companies will spend buckets of money on ensuring that their look and sensibility are uniform when marketing materials are out in the wild.

This consistency makes it easier for customers to recognize your brand. But the most important effect of consistent branding isn’t just that customers will recognize you– it’s that they’ll trust you.

 Trust is the product of familiarity and consistency, and it’s far easier to be consistent across platforms when you have a strong sense of who you are as a brand. Strong branding helps you stick out in a crowd, and repeated viewing reinforces who you are to consumers. By extension, a consumer’s ability to quickly recognize you means that when they see your brand in public, they’re more focused on your message than picking you out of the crowd. And one way for consumers to recognize you is through archetypes.

What a Character!

Branding: Who
Marketing: What & Why
Advertising: Where & When

Archetypes are typical examples of a person or concept that appear across different fields of literature, art and behavior; in other words, archetypes are familiar concepts that appear in storytelling. An outlaw is an example of an archetype. If an outlaw appears in a story, you may find yourself immediately drawing conclusions about that character’s motivations and sensibility and imagining how the outlaw fits into the story.

This demonstrates how archetypes can serve as a kind of shorthand when you’re telling your own brand story. We’ve created 16 archetypes–brand characters, if you will–for the cannabis industry, such as the Activist, the Doctor and the Stoner, among others. These archetypes all have a specific look and tone that you can use in your communications to keep your messaging consistent and effective so that people are focusing on your message rather than sussing out who you are and what you stand for.

For one thing, this makes your marketing efforts easier on you because you’ll be able to tell what makes sense in the context of your archetype. For example, the Doctor Archetype wouldn’t be sharing a 4/20 playlist, and an Activist Archetype wouldn’t be arguing the merits of different CBD bath bombs. You don’t want consumers scratching their heads, and having an archetype helps to determine what kind of behavior is appropriate for your brand.

Moreover, it helps to establish consistent behavior that your consumers see. Consistency helps to build trust because it helps customers build expectations. When you build expectations and you act in a way that immediately feels familiar to them, they’ll feel more comfortable with you. Imagine your closest friends; you have a strong sense of who they are. You know that your friend will refuse to order their own fries and then pick at your own. But there’s some comfort in this because when a person acts exactly as you expect, it makes you feel as though you know them deeply. And when there aren’t any mysteries, you can focus on what lies ahead in your friendship.

You know that Apple stands for sleek design and innovation.

Brands operate the same way. When you see an Apple ad, you don’t have to rack your brains for context before you absorb their message. You know that Apple stands for sleek design and innovation, so when you see an Apple ad, Apple doesn’t have to keep reintroducing those values. Instead, you can focus on the new product or idea being featured, knowing that the sleek design and innovation are already baked in– and it’s because Apple has done decades of legwork making sure that that’s the case.

Archetypes make that legwork even more efficient by giving you those values as part of a character. If you think of your brand as a character, it immediately makes your communication more human. For instance, like Apple, the Scientist Archetype also values innovation. But when you write social posts as a Scientist Archetype rather than a brand, it makes it easier to connect with folks because you’re writing from a particular person’s perspective rather than a bulleted list of company values.

It also grants you more structure in your brand strategy because it allows you to envision a whole person. When you’re writing a post, for example, you can ask yourself, “Would the Scientist say this?” You can envision this Archetype’s mannerisms and sensibility, and being able to do that makes it far easier to know what will feel real to consumers– and by extension, trustworthy.

That ability to build trust is what will ultimately decide how successful your brand is in this burgeoning industry. You’ll be facing more competition than ever and you may eventually find yourself facing companies selling near-identical products. The brands that will win out will be the ones that know how to build trust with consumers with a cohesive brand strategy. With the right strategy, that could be you.

Want Strong Profits for Your Cannabis Business? Start by Building Your Brand

By Danielle Antos
1 Comment

Everyone knows that the packaging of your cannabis product creates the first impression for a potential customer. However, product packaging is sometimes an overlooked detail for new and existing cannabis businesses. The packaging design for your cannabis product is vital to establishing your brand and building a loyal customer base. Packaging impacts your product significantly: it must keep your products safe and secure, but it also has to help you increase your sales volume and bottom line. Ultimately, a well-executed and managed brand translates into increased profitability.

Today, plastic HDPE, LDPE, PP and PET bottles and closures are widely-accepted packaging options for cannabis products. Plastic packaging offers abundant choices, but how do you know which plastic bottle and closure is right for your product? Here is a checklist that will help you create packaging that hits the target.

Know Your Competitors

Do your research and check out the competition. What are other cannabis companies doing? What type of plastic packaging do they use and is it high quality? What is their message and are they consistently branding their packaging across all product lines? How can your cannabis packaging stand out and attract attention? This knowledge will help you to define your brand and how you can differentiate your cannabis products from your competitors with the right packaging.

Appeal to Your Target Audience

Your cannabis products can’t fulfill the needs of all consumers, so define the type of consumer you are trying to reach. Tailor your message to the specific groups that meet your brand’s criteria. Consider demographics such as lifestyle, age, location and gender. Also consider what is important to them. For example: is your target audience concerned about the environment? If so, consider plastic packaging alternatives such as Bioresin. Polyethylene produced from ethanol made from sustainable sources like sugarcane, commonly known as Bioresin, are becoming more common. Bioresin bottles have the same properties and look the same as traditional plastics, so it is easy to convert. Defining what speaks to your target consumer will help you determine which plastic packaging option to choose for your cannabis product.

Convey Your Message to Consumers

How do you want consumers to perceive your cannabis product, company, and values? What expectations will it meet? Take Coca-Cola for example. It’s an instantly recognizable brand because of consistent use of the same style and color packaging, along with a universally-appealing message of refreshment, taste and satisfaction. Coca-Cola’s messaging has remained consistent over decades and it fulfills the expectations of consumers – they know exactly what they’re getting when they purchase it.

The message on your cannabis packaging should reflect your company values, fulfill customer expectations and of course, be eye-catching and promote the product inside. Packaging should also convey your brand information consistently and across all product lines. Consumers will become accustomed to your brand and will trust your products.

Make Your Product Stand Out

Once your brand message is defined, you can move forward with selecting the right plastic packaging. There are many crucial points to consider in the selection process. For example, if providing the freshest products to the consumer is critical, then select plastic bottles and closures that ensure your product does not become stale or contaminated. If protecting consumers is part of your brand message, then select bottles and closures that meet federal and state regulations for child safety, that are manufactured with FDA-approved materials, and that meet ASTM certifications.

The product branding process can be intimidating. Overcome your fears by working with a plastic packaging manufacturer that fits your needs. Sometimes an off-the-shelf HDPE bottle or plastic closure just won’t do. Unique bottle shapes, the use of colored resins, and switching to plastic packaging made with sustainable materials are options that will showcase your cannabis product and help increase visibility in the marketplace. Look for a plastic manufacturer with diverse capabilities and packaging ingenuity. A manufacturer that offers a diverse product line and also can develop customized bottles and closures to your exact specifications and appearance will be a great asset to you. They can guide you through the process to ensure that you get a product that will help differentiate your brand and make your product stand out.

Follow Through

Consistent and targeted branding based on thorough research is a proven approach to creating a strong brand. When your brand message is applied to all of your plastic packaging across your cannabis product lines, a stronger and more recognizable brand is created. Remember to follow through with your brand messaging across all other channels of communication such as: print advertising, signs at your business’ location, on your website and through your online marketing efforts. Your sales and customer service staff should also reinforce your brand message when meeting with customers and prospects. A thoughtful and well-planned strategy for your brand will help increase sales and grow your new start-up or established cannabis business.

Branding for Cannabis Companies 101: Part 2

By Jennifer Whetzel
1 Comment

Editor’s Note: In Part 1, Jennifer Whetzel introduced the concepts of branding, marketing and advertising for cannabis companies. Part 2 takes a closer look at the benefits of branding. Stay tuned for Part 3 coming next month.


The Value of Branding

Think back: do you remember the very first Nike ad you saw? Probably not.

But when you see the swoosh, you immediately think of Nike. When you see the swoosh, you probably even think “Just do it.” A whole sensibility, one that signifies perseverance and athletic excellence, gets conjured up by that swoosh. A lot of people think that’s the power of advertising, but they’re only partially correct.

The fact that you don’t just know the swoosh but have thoughts and feelings that bubble up when you see it is due to branding. Companies like Nike don’t spend millions on branding reflexively. They do it because brand recognition and the feelings that come with it turn potential consumers into buyers. Branding success is necessary, measurable and valuable – especially for brands looking to establish themselves.Strong branding is what will increase the chances that your marketing and advertising will be effective, and it’s why branding must be one of your top priorities.

Branding: The Precursor to Advertising

You might not know specifically what ads work on you. But the ones that do work are driven by a strong brand.

For example, check out this ad campaign run by McDonald’s: Essentially, the fast food giant used fractions of its logo to make a wayfinding system on highway billboards. It’s clever and memorable, but it only works thanks to McDonald’s strong branding. McDonald’s has spent years building that shorthand because they understand that immediate recognition pays off in the literal and figurative sense.

Similarly, you know an Apple or an Under Armour ad when you see one. And you know this because there’s a consistent look and sensibility that these companies have worked to codify – that’s the branding piece. If you immediately recognize who these messages are coming from even before you engage with the ad, you’re more focused on the message rather than trying to suss out which company it’s coming from or what they’re selling.

This is why branding has to be a precursor to advertising. If you create ads before you build your brand, you may get a message out about what you’re offering. But if you do this, you’re talking at your customer rather than building a relationship with them. Strong branding is what will increase the chances that your marketing and advertising will be effective, and it’s why branding must be one of your top priorities.

The Benefits of Branding

Branding is about building a lasting, positive relationship with your customer. When you present a consistent brand personality and identity to your audience, you build trust. Consider how you form any long-term relationship; it’s through repeated positive, consistent encounters that allow you to see the other party for who they are. You trust them because you feel that you understand them and that they understand you.

Strange as it seems, it’s also true of brands. Building that bond with your customers will give you an advantage against brands that aren’t very distinct. With proper branding, a company can build and solidify consumer trust, trust that pays off in the form of increased sales, loyalty and good reviews. These brands aren’t constantly introducing themselves to consumers because over time, the branding itself does the selling and makes it easier to introduce new products down the line. Companies that don’t build that trust will have to fight for recognition, and things only get worse with more competition.

The Dollar Value of Branding

And of course, there are numbers to back this up. Every year, Forbes puts out a list of the world’s most valuable brands, and they use complex math to determine the actual value of this intangible thing called a Brand. Based on their thinking, a branded product should earn an 8% premium over a generic product. You can see some of their findings in the table below for a few categories that are traditionally very well-branded.

Industry Brand Brand Value (Billions)[1]
Technology Apple $205.5
Technology Microsoft $125.3
Consumer Packaged Goods Coca-Cola $59.2
Restaurants McDonald’s $43.8
Apparel NIKE $36.8
Restaurants Starbucks $17.0
Apparel Adidas $11.2
Consumer Packaged Goods Kellogg’s $8.0

These numbers, however, make it difficult to compare how well a company’s branding works for them because the brand’s total value is influenced by the size of the company. After doing a few simple calculations, we compared the Brand Value to the total Enterprise Value of each company to determine what we will call their Brand Contribution, which demonstrates how their branding efforts paid off.

When you compare the percentage of total company value that solely comes from the value of the brand, we can see that Nike significantly outperforms competitor Adidas, McDonald’s has a stronger brand than Starbuck’s, and Apple comes close to doubling the brand performance of Microsoft — none of which is surprising.

What might surprise you is the brand at the top of the list when it comes to contribution versus overall company value. Kellogg’s is one of the smallest companies to make the list in terms of Brand Value, and it has the lowest enterprise value in our list. Yet, Kellogg’s has the highest brand contribution. This makes sense in the high-stakes world of consumer-packaged goods; the competition is fierce, well-funded and global, which means that branding that resonates with customers is extremely important.

Industry Brand Brand Value Enterprise Value[2] Brand Contribution[3]
Consumer Packaged Goods Kellogg’s $8.0 $28.4 28.2%
Apparel NIKE $36.8 $133.4 27.6%
Restaurants McDonald’s $43.8 $187.2 23.4%
Consumer Packaged Goods Coca-Cola $59.2 $254.8 23.2%
Technology Apple $205.5 $950.3 21.6%
Apparel Adidas $11.2 $59.0 19.0%
Restaurants Starbucks $17.0 $109.7 15.5%
Technology Microsoft $125.3 $990.9 12.6%

These companies are all massive and wealthy because they prioritize trust and consistency as part of their long-term plan to sell products. Branding promotes loyalty, but its ability to promote trust can be even more powerful by paying off in the long-term. And in this new legal cannabis market, trust is going to be just as critical as it is for traditional companies. After all, the power of branding isn’t just getting people to know who you are — it’s getting them to believe in you.

  1.  https://www.forbes.com/powerful-brands/list/#tab:rank
  2. Enterprise value gathered from ycharts.com on 6/20/2019. Ycharts defines enterprise value as: Enterprise Value (EV) is a valuation metric alternative to traditional market capitalization that reflects the market value of an entire business. Like market cap, EV is a measure of what the market believes a company is worth. Enterprise value captures the cost of an entire business, including debt and equity. It is a sum of claims of all preferred shareholders, debt holders, security holders, common equity holders, and minority shareholders – unlike market cap, which only captures the total value of common equity securities.
  3. Ladyjane’s valuation of the strength of a brand. What percentage of the company’s overall valuation can be attributed to the brand? Brand Contribution = Brand Value / Enterprise Value